830 Phil. 269
REYES, JR., J:
WHEREFORE, premises considered, judgment is hereby rendered as follows:Dissatisfied, the respondents appealed the RTC's decision to the CA via CA-G.R. CV. No. 93172. On February 14, 2014, the CA rendered its Decision that modified the RTC's Decision by further reducing the total award. The fallo of the CA decision reads:
1. Ordering the [respondents] to pay [petitioner] the amount of Two Million Eight Hundred Forty Eight Thousand Pesos (Php2,848,000.00) plus interest thereon at the legal rate from March 4, 2008 until the amount is fully paid;
2. Ordering the [respondents] to pay [petitioner] the amount of Php200,000.00 as and for attorney's fees;
3. Dismissing all other claims and counterclaims for lack of basis.
No pronouncement as to cost.
SO ORDERED.[3]
We MODIFY the Decision dated 28 January 2009 of the [RTC]. Branch 41, Dagupan City, in Civil Case No. 98-02678-D, as follows: 1) we ORDER the [respondents] to pay [petitioner] the amount of P1,710,271.21, plus legal interest x x x at the rate of six percent (6%) per annum, computed from the finality of the judgment until full satisfaction;For the CA, it was clear that the respondents had an unpaid obligation to the petitioner for the construction of the Medical Arts Building and the 18 change orders that were effected in relation thereto. The trial court's award was however reduced by the appellate court given the following findings:
2) we AFFIRM the award of Php200,000.00, as attorney's fees, in favor of [petitioner]; 3) we AFFIRM the dismissal of the [respondents'] counterclaims.
IT IS SO ORDERED.[4]
During the proceedings before the RTC, [petitioner] was able to prove that the total cost of the 18 change orders was Php9,836,505.32. We find it necessary, however, to fix the total cost of the 18 change orders to the amount claimed in the Complaint, i.e., Php9,796,816.94.Following the Court's ruling in Nacar vs. Gallery Frames and/or Bordey, Jr., the CA also changed the rate and reckoning date of the interest on the award, as it declared that the principal amount of P1,710,271.21 shall earn interest at the rate of 6% per annum from date of finality of the judgment until full satisfaction.
In the same wise, we cannot allow the amount of Php271,915.99 (Item C, items which were found on the building but were not billed by the [petitioner]) to be credited, since this was never alleged, nor prayed for by the [petitioner] in the Complaint.
It was also erroneous for the RTC to use the amount of Php13,528,200.00, as the total amount of payment made by the [respondents] to the [petitioner]. The complaint alleged that the sum of Php17,596,816.94 represents that total construction cost of the Medical Arts Building under the original Agreement (Php7,800,000.00) and the 18 change orders (Php9,796,816.94). The Complaint also alleged that after the payments made to the [petitioner], the remaining balance of the [respondents] is the sum of Php3,241,800. x x x Thus, the correct amount of total payments made by the [respondents] should be Php14,355,016.94.
Thus, the total balance due to the [petitioner] should be Php1,710,271.21 x x x.[5]
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthem1ore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% [per annum] to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.In this case, the award of interest is discretionary on the part of the court. The petitioner's original demand does not equate to a loan or forbearance of money but pertains to the cost of construction and services, the amount of which has not yet been determined with certainty even up to the time of the complaint's filing with the RTC. Petitioner's original claim was in fact thereafter limited by the RTC after a consideration of the evidence presented during trial, and ultimately further reduced by the CA. The uncertainty was brought about by the numerous change orders that happened while the subject Medical Arts Building was being constructed. Clearly, at the time of the petitioner's judicial and extrajudicial demands, the amount of the respondents' obligation remained uncertain.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.[7] (Emphasis supplied)